Governance: at the heart of modern day ESG trustee thinking

18th March 2021

Anne Baggesen, Managing Director of our Private Wealth Division at Suntera Global, discusses how approaches to governance are evolving across the modern private wealth landscape, and how that is shaping Suntera Global’s own journey as a leading service provider to a global client base…

Q: Across the ESG agenda as a whole, how significant is the ‘G’ strand for trustees?

AB: Ultimately, governance and responsibility are ‘what we do’ as a trustee. It’s an intrinsic part of our role, to carry the load and to be accountable for our actions but also to channel stewardship around managing that responsibility. Arguably, the emphasis in the rapidly evolving ESG space to date has been on the ‘E’, but increasingly we’re seeing recognition amongst clients that the governance – what underpins stewardship, responsible behaviour and integrity – is absolutely critical, and what helps everything we and our clients do stand up to scrutiny.

Q: Do approaches to governance differ across the different international markets?

AB: It’s not clear that there are regional approaches to ESG, but what we have noticed as a business with broad international reach is that different businesses and institutions can have markedly different priorities or areas of focus to one another.

Increasingly, though, institutions are talking about ESG and sustainable investing and that’s a clear direction of travel globally. You do find, though, that not all firms will have a strong message or framework within their own business model – they may not all foster an inclusive or diverse working environment or policy around recruitment and employment for example.

It’s a question of standardisation and evolution over time - the more global firms will be adopting strong ESG frameworks, for example, and this will affect the local and regional markets but at the same time it does feel like the more boutique firms are the ones that appear to be more concerned, expressive and agile around their governance frameworks and corporate responsibility, regardless of their global reach.

Q: How is the importance attached to governance reflected within Suntera Global itself?

AB: We’ve been very clear as we have evolved as a business that having a strong culture of trustee responsibility that not only exists but thrives in each of our jurisdictions, is what makes us who we are. It’s why we have local Suntera Global senior staff and Group representation making up the boards of our corporate trustees throughout the business and why our trust teams are made up of professional practitioners, many of whom are STEP qualified.

Of course, no family is the same as another, so it stands to reason that no trust will be the same either. That’s why it’s so important to have in place a robust Group governance framework to encapsulate the bespoke advice, guidance and assistance we provide to clients and ensure that decision making follows a responsible and safe path as well as being compliant.

The ‘compliance’ landscape has changed dramatically over the past decade. The drive to ‘know your client’ has become a highly complex, sophisticated sector in its own right, focused on transparency, anti-money laundering, substance, profit shifting, management and direction, corporate governance and more. It’s now not only about ensuring we all know and understand who we are working with and accurate transaction monitoring, it’s about complying with the implementation of increasing new information exchange initiatives, tax-related legislation and regulation around transparency, and demonstrating unequivocally the effectiveness of those initiatives.

Q: Looking forward, are governance standards keeping up with the pace of digital change?

AB: The management of international family wealth has always had to adapt to changing regulatory, societal and cultural norms, and digital change is certainly a major force shaping the sector. But it’s now not a question of digital disruption; rather it’s about digital processes being seamlessly integrated to enhance service, accessibility and processes.

Wealth in its broadest sense is becoming more complex and as clients increasingly expect to communicate and transact digitally, so innovative, technology savvy trust companies like ourselves are increasingly “pushing” against what might be considered to be ‘traditional’ methods of client onboarding, KYC and reporting. But it’s important that this digital adoption is not at the expense of ‘traditional’ high quality client service.

It’s vitally important too that as clients’ needs become more global, so the capability to deliver governance frameworks that embrace digital technologies becomes more critical. The role of the regulator in facilitating digital compliance and governance is largely going to dictate the pace of change and adoption across global markets, but at an industry level we are absolutely focused on ensuring we remain at the forefront of digital skills and innovation.

Q: How has the Covid-19 experience accelerated thinking in the governance arena?

AB: It’s always been the case that, as a trustee, carrying the responsibility to ensure clients and staff have a sustainable future under our umbrella of care requires us to provide and maintain a robust framework of governance. Having that right structure in place allows for flexibility to be engaged when the world around us changes.

That is really what has come to the fore over the past twelve months in light of Covid-19. The pandemic has shone a light on governance and sustainable practices, and for me those two concepts absolutely go hand in hand. For our clients, it’s about more than just looking after their assets in a responsible way; it’s also about ensuring that the infrastructure of our business and our risk and governance framework can withstand unexpected changes or threats – like a pandemic.

We need to be ahead of the curve when it comes to changes in regulation or legislation affecting our industry, we need to engage with and employ the right people to protect us and our clients and we need to commit to those sorts of investments in our business. Having governance at the heart of what we do is critical in supporting that and in ensuring we are fit for the future.

For more information about our ESG commitment, click here.

This article was featured on page 29 of ThoughtLeaders for Private Client's fourth edition - Trustees Under Pressure. View the magazine here.


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